Internet Man - internet mutual fund manager Ryan Jacob

Kiplinger's Personal Finance Magazine, May, 2000 by Robert Frick

The publisher of IPO Value Monitor is a small New York investment firm, Horizon Asset Management. And the co-founder of Horizon is Peter Doyle, who also runs the parent company of Kinetics Internet fund.

Doyle drafted Jacob to work on the Internet fund from IPO Value Monitor in 1997. To say the fund was run on a shoestring at the time is an insult to shoestrings. Its office: the den of a retired Long Island postal worker. "It was a seat-of-the-pants kind of thing," says Alexander. With less than $200,000 in assets, the fund couldn't even afford a "custodian"--an unrelated company to hold and keep track of stocks owned by the fund. So stock certificates were stowed in a safe-deposit box, making them very difficult to trade.

Alexander was so strapped for time that he turned over management of the fund to Jacob at the end of 1997. So the 196% return in 1998 reflects Jacob's work, says Alexander. Last year started out like gangbusters as well, and money poured in.

Kinetics was sitting on a plum, which at one point it agreed to sell to investment company Lepercq, de Neuflize, where Alexander is a vice-president. Alexander says Kinetics backed out of the deal because the asset explosion had suddenly made running the cash-strapped fund extremely lucrative. "When the document was signed, they were clearly tickled pink with the price we paid," says Alexander. "And five or six weeks later they were kicking themselves." Doyle declined to comment.

Jacob was offended by the treatment accorded Alexander and Lepercq by Doyle. So the hottest mutual fund manager in the land quit last June amid charges and countercharges. Kinetics people said Jacob was part of an investment team and was merely the fund's public face. Jacob insisted he was the sole manager and privately vented his anger using words not found in the Boy Scout Handbook.

By August of last year Jacob looked forward to opening his own fund, sure to be stoked with money attracted by the high-profile squabble with Kinetics. But the claim that he didn't actually run the fund in 1998 apparently stuck in the mind of SEC regulators, who delayed the new fund's approval. Weeks became months. Moaned Jacob: "The SEC is just killin' us."

Approval finally came only after it was decided that Alexander would also appear in the prospectus as assistant manager of Jacob Internet fund. In that way, the full "team" that claimed the 196% return for Kinetics Internet fund in 1998 could be said to run the new one.

The long wait robbed Jacob of what would have been months of strong performance at the end of 1999. One stock on his short list, GoTo.com, traded for about $30 last August and peaked at $113 in November. Another, Ask Jeeves, went from $31 to $130 in that same period.

Finally on December 13, with the SEC's clearance in hand, Jacob Internet fund began. Jacob sat on $151,191,629--the money from the 10,000 or so people who kept in touch with him and thus became the fund's original investors. Starting a fund from scratch with that much money is almost unheard-of, and it came at such a rate that 50 people at the company hired to collect money and manage customer accounts labored to keep up with the check-laden mail.